UK MPs to probe Stagecoach East Coast rail franchise deal

The government's decision to end the East Coast Mainline franchise early is to be investigated by parliament's Transport Committee.

The all-party committee said there were “serious questions” to be asked after the third collapse of a commercial franchise agreement on the eastern part of the railway in just over 10 years.

Transport Secretary Chris Grayling was accused of bailing out franchise operators Stagecoach and Virgin after the companies said in November they would have to pull out three years early after bidding £3.3bn to run it.

However Grayling was forced to act even faster last week when he said the operator had "got its numbers wrong" and would only run the London to Edinburgh line only for "a small number of months and no more".

Stagecoach owns 90% of the joint venture and Virgin owns the remaining 10%.

Transport committee chair Lilian Greenwood said the failure of the franchise had “wider implications for rail franchising and the competitiveness of the current system”.

“In the meantime, the Department for Transport must take the right steps to protect passengers and taxpayers. Safeguards must be put in place to restore public confidence in the sustainability of our railways."

Grayling has proposed two options for the franchise up to 2020: take it back into public ownership or some form of not-for-profit arrangement.